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Question

You own an oil well that will pay you $25,000 per year for 8 years, with the first payment being made today. If you think a fair return on the well is 7%, how much should you ask for if you decide to sell it?

Submitted: 255 days and 22 hours ago.

Category: Finance

Value: $9

Status: CLOSED

Already Tried:
1. $159,732
2. $116,110
3. $217,513
4. $315,976
5. $288,349

Accepted Answer

P = ($25,000 * PVo) + ($25,000 * PVn)

($25,000 * 1.0) + ($25,000 * 5.3893) = $159,732

PVo - PV of Annuity in first year
PVn - PV of Annuity in following years (1 to 7)

Answer: 1. $159,732

Accepts:
Expert:	Lev
Pos. Feedback:	99.1 %
Answered:	3/11/2009

Tax Preparer

Personal Investment, Tax Preparation

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Question

You own an oil well that will pay you $25,000 per year for 8 years, with the first payment being made today. If you think a fair return on the well is 7%, how much should you ask for if you decide to sell it?

Optional Information

Already Tried:
1. $159,732
2. $116,110
3. $217,513
4. $315,976
5. $288,349

Accepted Answer

P = ($25,000 * PVo) + ($25,000 * PVn)

($25,000 * 1.0) + ($25,000 * 5.3893) = $159,732

PVo - PV of Annuity in first year
PVn - PV of Annuity in following years (1 to 7)

Answer: 1. $159,732

Finance

Have your own Finance question?

Related Finance Topics:

Question

You own an oil well that will pay you $25,000 per year for 8 years, with the first payment being made today. If you think a fair return on the well is 7%, how much should you ask for if you decide to sell it?

Optional Information

Already Tried: 1. $159,732 2. $116,110 3. $217,513 4. $315,976 5. $288,349

Accepted Answer

P = ($25,000 * PVo) + ($25,000 * PVn) ($25,000 * 1.0) + ($25,000 * 5.3893) = $159,732 PVo - PV of Annuity in first yearPVn - PV of Annuity in following years (1 to 7) Answer: 1. $159,732

Related Finance Questions

Already Tried:
1. $159,732
2. $116,110
3. $217,513
4. $315,976
5. $288,349

P = ($25,000 * PVo) + ($25,000 * PVn)

($25,000 * 1.0) + ($25,000 * 5.3893) = $159,732

PVo - PV of Annuity in first year
PVn - PV of Annuity in following years (1 to 7)

Answer: 1. $159,732